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Crowdfunding vs. Peer-to-Peer Fundraising: Which Is Right for You?

10 min read
December 27, 2023
Ronnie Gomez headshot
Ronnie Gomez
Content Marketing Manager, Neon One

If you’ve been exploring tactics for reaching new potential donors, you may have come across the terms “nonprofit crowdfunding” and “peer-to-peer fundraising.” They’re often used interchangeably, but they’re actually two separate styles of fundraising. 

Crowdfunding and peer-to-peer fundraising definitely have some similarities. Both are great options for any nonprofit that’s looking for a way to become more visible in their community and reach new donors, for example. But there are a few key differences you’ll need to understand before you choose the one that’s right for you.

Let’s take a look at the differences between crowdfunding and peer-to-peer fundraising.

What is Nonprofit Crowdfunding?

Crowdfunding is a fundraising technique that can be used by both individuals and nonprofits. It makes use of social networks and social sharing and brings communities of people together around a single cause. Some common examples of crowdfunding you may already have encountered include:

  • Kickstarter campaigns, where someone raises money to fund a new product, business, or project
  • GoFundMe campaigns, where someone raises money to pay for medical bills or other major expenses
  • Independent campaigns, like grass-roots fundraisers where money is collected by Venmo, CashApp, or other payment apps

Nonprofit crowdfunding, like other crowdfunding types, often involves raising money through many smaller transactions

How Individuals Use Crowdfunding 

Crowdfunding by individuals usually works best when it’s used to raise money for specific expenses, like a new product or a medical bill.  Here’s an example: 

Lee needs to raise money to pay for his wife’s medical expenses. He sets up a crowdfunding campaign on GoFundMe. His campaign must have an end date and a financial goal, and Lee is required to write a description of why he’s raising money and how he’ll use it. He can also add photos and videos to support his appeal for help. Depending on the platform he’s using, Lee’s progress toward his fundraising goals will be marked by a campaign thermometer.

Once his campaign is built, Lee shares his fundraising page on social media sites like Facebook and Twitter. He may also send emails to his friends and family members.

These messages all contain a link to Lee’s crowdfunding campaign. His friends and family members can then donate to his crowdfunding campaign, leave messages of support, and share the campaign with their own networks.

Throughout the campaign’s duration, Lee can post updates, photos, and videos to keep campaign supporters up to date. He may choose to share how his wife is feeling, how much they’ve raised, and what his family will do with the money people have given.

Once the campaign is over, Lee sends thank-you emails and letters to let everyone know how much he and his wife appreciate their donations.

How a Nonprofit Uses Crowdfunding

Like crowdfunding for individuals, nonprofit crowdfunding is most effective when raising money for a very specific program or project. Here’s an example:

The Agloe Community Center needs to raise money to build a new gymnasium in their community. They’ll set up their own crowdfunding page and include information about the project. Depending on the fundraising platform they use, they may create a donation form dedicated to the campaign or opt for a traditional crowdfunding platform like GoFundMe instead. 

Either way, the team decides to use a campaign thermometer to help track their progress toward their fundraising goal. They’ll also upload photos and videos to support their appeal. Pictures may include renderings of the new gym, construction updates, and stories and photos of individuals who will benefit from the project.

Then, the Community Center will share their campaign across their social media profiles and on their website. They’ll also send emails to their current donors and prospects asking for support. As people donate, their fundraising thermometer fills up, demonstrating how close they are to their goal.

During the crowdfunding campaign, the team sends receipts and thank-you notes to their supporters. They also provide updates as they move closer to their goal, and they alternate between thanking those who have already donated and inviting others to get involved. 

Once the campaign is over, they’ll acknowledge all of its supporters with personalized thank-you letters and send occasional updates about the new gym’s construction.

A Typical Nonprofit Crowdfunding Campaign

Nonprofit crowdfunding campaigns usually work like this:  

  1. The organization sets its fundraising goal, defines how long it’ll raise money, and creates a dedicated donation form to support their campaign
  2. Organizers share their donation form with their audiences, usually through social media or email
  3. Donors may choose to share the crowdfunding campaign with their own networks if they’re especially passionate about the cause
  4. The campaign closes once the organization reaches the end of the fundraising period

Here’s an example of a nonprofit crowdfunding campaign:

habitat for humanity nonprofit crowdfunding
This is a classic nonprofit crowdfunding campaign: It’s raising money for a specific project, features a fundraising thermometer, and emphasizes social sharing

This campaign from Habitat for Humanity Global Village is an outstanding example of a nonprofit crowdfunding campaign. They do a great job of including visuals and a detailed description to encourage people to support their cause. 

The campaign is raising money for a specific project—building homes—and has a definitive fundraising goal. The crowdfunding page includes large social sharing buttons and a fundraising thermometer, both of which make it easy for donors to track their progress and encourage others to support the cause.

What is Peer-to-Peer Fundraising?

Peer-to-peer fundraising is a technique only used by nonprofits. In a peer-to-peer campaign, organizations recruit loyal supporters who raise money on the nonprofit’s behalf. Whereas crowdfunding campaigns involve a single party asking a large audience for support, peer-to-peer fundraisers involve many individuals asking their own networks for donations.

As a general rule, the organizing nonprofit will create a campaign site that includes individual pages for each participating fundraiser. Participants can update their page with personal stories, images, and appeals before sharing it with their friends, families, and colleagues.  

Peer-to-peer fundraising is versatile and can support a number of different campaign styles. They’re often tied to an event, like a walkathon or marathon: Participants raise money before participating in a 5k or other event. Other campaigns are entirely virtual and don’t involve any activity at all. Some nonprofits have even used peer-to-peer fundraising tools to encourage board members to raise money using their own fundraising pages.

A Typical Peer-to-Peer Fundraising Campaign

What are the usual steps for planning a peer-to-peer fundraising campaign?

  1. A nonprofit chooses a peer-to-peer platform, sets its overall fundraising goal (plus a goal for individuals and teams), and creates an event page
  2. The organization recruits engaged supporters to raise money on their behalf
  3. Interested supporters create their own individual fundraising page using a template provided by the nonprofit
  4. Participants share their pages and ask for donations from their network and ask people to give
  5. Each participant’s individual progress is tracked in a personal fundraising thermometer, and the collective total raised by all participants is displayed on an event-wide fundraising thermometer
  6. Once they’ve reached their deadline or goal, the nonprofit may host a culminating event (usually an active one) and thank their supporters and donors

Here’s an example of what a peer-to-peer donation form might look like.

This peer-to-peer fundraising page features personalized content and a streamlined donation form

This personal fundraising page belongs to an individual participant, not the organization as a whole. The form is short and concise, and it includes a personal message from the supporter who is fundraising. The page also includes a fundraising progress bar that shows donors how much that person has raised so far.

Nonprofit Crowdfunding vs. Peer-to-Peer Fundraising

Here’s a side-by-side comparison of these two fundraising strategies.

Crowdfunding CampaignPeer-to-Peer Fundraising Campaign
Has a set fundraising goal
Campaigns are typically time-bound
Single fundraising entity
Multiple fundraising entities
Relies on people sharing the fundraising campaign
Progress tracked with thermometers or similar elements
Nonprofit organization sends most of the appeals
Participants send most of the appeals
Often tied to a culminating event

Both fundraising strategies can be very successful for nonprofits! But how do you decide whether a crowdfunding campaign or a peer-to-peer fundraiser is the best fit for you?

When to Run a Nonprofit Crowdfunding Campaign

A crowdfunding campaign may be a good strategy if you:

  • Need to raise money for a specific expense
  • Don’t yet have a group of highly-engaged supporters who will raise money for you
  • Want to avoid managing multiple individual fundraisers

This is an exceptionally useful strategy, especially for nonprofits with small fundraising teams.

When to Run a Peer-to-Peer Fundraising Campaign

A peer-to-peer fundraiser may be a good fit if you:

  • Have a base of highly-engaged supporters who will raise money for you
  • Are able to dedicate staff time to supporting your participating fundraisers
  • Have access to a fundraising platform that can accommodate your campaign
  • Want to expand your donor base by empowering existing supporters to share your message with their networks

Peer-to-peer fundraisers require more time and resources than crowdfunding campaigns, but they’re valuable opportunities to build relationships with your supporters and reach new ones.

Peer-to-peer fundraisers are a great way to reach more people, but they do require extra time and effort from nonprofit staff

Nonprofit Crowdfunding and Peer-to-Peer Fundraising Are Both Great Options

If you’re looking to host an exciting fundraising campaign that runs alongside your regular fundraising activities, you may want to launch a nonprofit crowdfunding campaign or a peer-to-peer fundraising campaign.

Crowdfunding involves a single entity (that’s you!) raising money to reach a fundraising goal.

That goal is usually reached by recruiting many donors to give relatively small amounts. If donors are exceptionally invested in your campaign, they may choose to share your crowdfunding page with their friends and family. Your progress is tracked with a fundraising thermometer, and donations usually stop once you’ve reached the end of a predetermined fundraising period.

Peer-to-peer fundraising involves your nonprofit recruiting and organizing multiple individual fundraisers. 

You’ll create a fundraising goal for your overall campaign, but you’ll also create fundraising goals for individual participants. Your supporters will personalize their own fundraising pages, which they’ll share with their friends and families. Progress is tracked both on an individual level and on an event-wide level, and donations often stop once you’ve reached the end of a predetermined fundraising period. 

Since this fundraising method is relatively versatile, you may choose to use it to build excitement around a culminating event or to support long-term campaigns like board fundraisers. 

Use Neon One for Both Nonprofit Crowdfunding and Peer-to-Peer Fundraising

Both of these fundraising methods can help you raise money for important projects or programs, and both give you the opportunity to reach new donors. With the right tools, you and your nonprofit can effectively raise more money and grow your community of supporters.

Whether you need a straightforward crowdfunding page (complete with thermometer and social sharing buttons) or a solid peer-to-peer fundraising campaign, we’ve got you covered. Contact us to share your campaign idea and learn more about the tools you can use to succeed.

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